Wednesday, December 05, 2012

The Auto Financing Industry Has Learned Nothing And Forgotten Nothing

The US Auto financing industry seems obliviously to history and is increasingly making subprime loans so it can keep vehicle sales moving along.

The Detroit News: New subprime vehicle loans rise nearly 3%

I think we've seen how this ends quite recently with the subprime housing market, but at least people aren't investing and flipping cars with subprime financing, at least not yet. Then again, cars rapidly depreciate much faster than houses, from the moment they're purchased, which can make recovering on a defaulted subprime loan rather difficult.

Note which companies are more reliant upon, and are pushing these subprime loans:

General Motors Co.'s Chevrolet brand, along with Chrysler Group LLC and Fiat SpA brands Dodge, Chrysler, Ram and Fiat all demanded among the lowest credit scores.

Yes, the very same companies that were so recently bailed out are now dipping into the subprime market to keep selling their cars and making sure some are driving off the lots to keep the sales figures up.

Meanwhile, Chrysler's sales of the Dodge Dart seem to be missing their target.

But don't worry, because this time it'll be different.

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